Swiss Franc remains on the defensive despite stronger Swiss employment figures

The Swiss Franc has continued its downward trend, despite improved employment figures released by the Swiss Federal Statistics Office on Thursday. The USD/CHF pair has returned to levels just below its weekly high of 0.8063 during the early European trading session. The Swiss labor market showed a 2% increase in total employment, excluding agriculture, to 5.968 million workers in the second quarter, up from 5.537 million in the previous quarter.

Job vacancies also rose by 2,600 to 98,700 in the three months to June, with 33.9% of companies reporting difficulties in recruiting qualified workers. However, despite these strong labor market indicators, the Swiss Franc has not shown significant strength. Meanwhile, the US Dollar remained moderately favored across the board, as concerns over price pressures and the Federal Reserve's potential interest rate hikes weighed on the pair.

Analysts at Deutsche Bank noted a notable shift in market expectations, with a possible 42 basis points of rate hikes priced in by June. This adjustment in expectations has directly impacted the rates market, with 2-year Treasury yields rising by 3.6 basis points to 4.21%. The Swiss labor market's employment level is a key indicator of economic expansion, with higher readings generally seen as positive for the Swiss Franc.